Gov't plan can coexist with private insurance

By RICARDO ALONSO-ZALDIVAR, Associated Press Writer Ricardo Alonso-zaldivar, Associated Press Writer

WASHINGTON – A new government health insurance plan sought by President Barack Obama and congressional Democrats could coexist with private insurers without driving them out of business, an analysis by nonpartisan budget experts suggests.

The estimate by the nonpartisan Congressional Budget Office — seen as good news by Democrats — comes as leaders pushed Monday to make progress on health care overhaul before lawmakers go home for their August recess.

House Speaker Nancy Pelosi, D-Calif., says a floor vote is still possible in the next few days, and Democrats called a meeting of all their House members late Monday afternoon. In the Senate, a small group of lawmakers from both parties were resuming negotiations in search of an elusive compromise.

Obama's ambitious timetable for his top domestic priority has slipped as Democratic dissension has slowed the legislative work.

The White House and congressional Democrats were angered two weeks ago when the budget office director, Douglas Elmendorf, told Congress that the House bill lacked mechanisms to bring health care costs under control.

Now, Democrats are using the budget office's suggestion that a government-run insurance plan would not destroy private insurers to rebut one of the main charges against their proposal — that it would lead to a federal takeover of the private health insurance marketplace.

The controversy seems far from settled, given uncertainty over projections of how a revamped health care system would work.

Polls have shown that Americans support the idea of a public coverage option as part of health care overhaul. The insurance industry and employer groups say it could drive private insurers out of business, particularly if the government plan had the power to pay medical providers below-market rates.

More than 160 million workers and family members now get health insurance through an employer. A widely cited study by the Lewin Group, a private health research firm, estimated that more than 100 million people would sign up for the public plan proposed by House Democrats, making it the dominant insurer in the land.

But the budget office, in a letter Sunday to a senior Republican lawmaker, said its own estimate for the same legislation is "substantially smaller."

CBO estimates that only 11 million to 12 million people would sign up for the public plan — making it a much smaller player in the market. The government coverage would be available alongside private plans through a new kind of insurance purchasing pool called an exchange. CBO estimated about 6 million of those enrolled in the public plan would be workers and family members of employers that joined the exchange.

The reasons the estimates are so far apart have to do with different underlying assumptions.

The CBO estimated that the public plan would offer premiums about 10 percent lower than private plans; the Lewin analysis estimates the premiums would be at least 20 percent lower. The CBO estimates that only individuals and workers in companies with fewer than 50 employees would join the exchange, while Lewin estimated the exchange would eventually be open to all workers.

As if to underscore how such estimates can vary, the Urban Institute public policy center also ran calculations — and came up with different numbers. The Urban Institute estimated that about 47 million people would sign up for the public plan, if companies with fewer than 50 workers were allowed to join.

http://news.yahoo.com/s/ap/20090727/ap_on_go_co/us_health_care_overhaul/print

Copyright © 2009 Yahoo! Inc. All rights reserved